Free UK Credit Note Template

A UK credit note must show: an identifying number, date of issue, your name, address and VAT registration number, the customer's name and address, the number and date of the original invoice, a description of the goods or services, the amount credited excluding VAT, and the rate and amount of VAT credited. Those particulars, and the 14-day issue deadline, are set by Regulation 15C of the VAT Regulations 1995. Copy the free template below; no email required.

Last updated: 14 July 2026. Legal requirements checked against legislation.gov.uk (VAT Regulations 1995, Regulation 15C) on 14 July 2026.

The template

Copy it straight into a document, email or accounting system. Square brackets mark the fields to replace. Every line in it maps to a requirement of Regulation 15C except the reason line, which HMRC does not mandate but every finance provider and auditor will want to see.

CREDIT NOTE

Credit note number: CN-0001
Date of issue: [date]

From (supplier):
[Your company name]
[Registered address]
VAT registration number: [GB 123 4567 89]

To (customer):
[Customer name]
[Customer address]

Relates to original invoice: [invoice number], dated [invoice date]
Reason for credit: [e.g. returned goods / pricing error / agreed rebate]

Description of goods or services credited:
[Description]                    Qty: [x]

Amount credited (excluding VAT):   £[0.00]
VAT rate:                          [20]%
VAT credited:                      £[0.00]
TOTAL CREDITED (including VAT):    £[0.00]

Notes: This credit note reduces the amount payable against the
original invoice referenced above. Please adjust your records.

What HMRC requires on a credit note

Where a price decrease requires a VAT adjustment, Regulation 15C of the VAT Regulations 1995 (inserted with effect from 1 September 2019) requires the supplier to provide the customer with a credit note within 14 days of the decrease occurring, containing:

1. The identifying number of the document
2. The date of issue
3. The name, address and VAT registration number of the supplier
4. The name and address of the recipient of the supply
5. The identifying number and date of issue of the original VAT invoice(s)
6. A description sufficient to identify the goods or services supplied
7. The amount of the decrease in consideration, excluding VAT
8. The rate and the amount (in sterling) of the VAT credited

Both parties then adjust their VAT: you reduce output tax on your return, the customer reduces input tax on theirs. Keep every credit note you issue or receive as part of your VAT records, alongside invoices, in line with HMRC's record-keeping rules (VAT Notice 700/21).

How credit notes affect invoice finance availability

If you fund invoices through factoring or invoice discounting, credit notes are not just paperwork: they move money. Your provider advanced cash against the original invoice value, so every credit note reduces the funded ledger and your availability falls by the advance rate times the credited amount. Credit a £10,000 invoice in full on an 85% advance and £8,500 of availability disappears, clawed back from your next drawdown or reserve.

Providers track your credit-note rate as dilution: the percentage of invoiced value that never converts to cash because of credits, disputes and discounts. Sustained dilution above roughly 5% is an underwriting red flag, because it suggests billing disputes, and it typically results in a lower advance rate or a bigger availability reserve. Two practical rules: never hide a credit note from your provider (it breaches the facility agreement and surfaces at audit anyway), and issue credits promptly so the ledger your provider funds matches reality.

Clean, well-documented credit notes actually help at underwriting: they show a working credit-control process. See what happens if an invoice is disputed for how providers treat contested invoices.

Statement of account template

A statement of account is the natural companion document: a periodic summary you send each customer listing invoices raised, credit notes issued, payments received and the balance owing. There is no statutory format; the layout below is the standard one and doubles as a polite chase.

### Statement of account layout (illustrative period: June 2026)

| Date | Reference | Type | Debit | Credit | Balance |
| --- | --- | --- | --- | --- | --- |
| 01/06/2026 | INV-1042 | Invoice | £4,800.00 |  | £4,800.00 |
| 09/06/2026 | CN-0031 | Credit note |  | £600.00 | £4,200.00 |
| 28/06/2026 | BACS | Payment received |  | £2,000.00 | £2,200.00 |
| 30/06/2026 |  | Balance due |  |  | £2,200.00 |

Source: Market Invoice statement of account template, illustrative figures

Standard running-balance layout: invoices as debits, credit notes and payments as credits, oldest first.

Head it with your company details, the customer's details, the statement date and the period covered, then list transactions oldest first. Send statements monthly; slow payers get fewer excuses when the running balance is in front of them. If statements are not enough, see our unpaid invoices hub for escalation routes, including statutory late-payment interest.